goldminingXpert (29.38)

The Market Is About To Plunge (Day 15, Vol. 13)

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The market is about to plunge? How can we be sure? Along with the many better reasons, I offer up a different approach. Despite what my feeble-minded critics type, I have a track record here. Leading critic Drumnutt has never made a single pick on CAPS, yet he had the audacity to post this regarding the alledged inaccuarcy of my predictions: "I don't expect 100% [accuracy], but maybe you could aim for at least 10% and then build from there?!?!" on his smearblog. Anyway, let's take a look back into the archives to see if anything I've said could have been of use to you:

GGP, The Facade Comes Unglued (May 2008, GGP was at 40, I said to short to 0, it's at 1.05 now. 96% of my price target achieved. I'll quote my blog at length.)

"These morons at General Growth Properties have at best, $5 a share in assets according to Reggie's brilliant Boombustblog... commercial malls in a depression are dead meat. GGP's debt is mostly due by next year, the untold billions of it, and no way do they get it all renewed on favourable terms. GGP is trying to sell off properties but are finding no buyers. Instead of pre-emptively filing for bankruptcy, these morons keep paying a dividend and imagining a world where they aren't toast. GGP is finished, I'm short it, own puts on it, and own SRS (the ultrashort of commercial real estate) whose largest holding is short GGP. These guys are a $0... short at $40, cover at $0... that's $40 a share profit in free money. I'm going to get rich off these clowns... they were down 5% today, join me before the party ends."

When Does This Whole Wind Bubble Blow Over (June 2008, AMSC then 44, today 23. By the way, AMSC--the company I was bashing in that post made it's record high 1 day after the post and then proceeded to lose 80 % of its value in the upcoming 6 months.)

Western Refining, It's Time To Buy (August 2008, WNR @ 6.97. This would be the first of more than half a dozen blogs recommending this stock. It is up 110% since this first pick!)

Sell All Ultrashorts Now (Oct. 10, S&P at 900.) The next day was the single biggest gain in Dow history as it rose 900 points. Now that's good market timing. I got you a crash and got you out a day before the biggest one-day up move in market history.

I could go on at length, but the above posts are more than enough for me to rest my credibilty on. I literally can't stop laughing when people who've never made a single CAPS pick rail on me for not having a track record.

Actually, let me throw one more in...

From the Fool's main page, Christopher Barker wrote up a piece where CAPS players picked their pet stock for 2009. Mine, of course, was Western Refining. WNR began 2009 at 7.76. It last traded at 14.2 and was over 16 last week. That's right, GMX's pet stock doubled this year. Has your pet stock doubled? Of course, my critics argue I can't pick a green thumb to save my life, but hey, what do critics accomplish anyway. If they knew what they were talking about, they'd be leading, not sniping at the leaders.

(first, please do not take this personal again, I have not followed your multitude of posts, just the last few ones and I have nothing to say about them)

Why did your player gmxmkttiming (for gmx market timing I suppose) not do that well? I think its score line is tracking that of your other player goldminingxpert pretty closely. Maybe you could post a link to the graph comparing those two players (the one you see when you click here being logged in as goldminingxpert). Again, nothing personal ...

(side note to everyone: I somehow like these score line comparison graphs. The link can be found by pressing the right mouse button (unless you are using something rather exotic to access the internet I guess).)

GMX, Hey man. I agree with this post and with all your others. Here is another reason why the market is about to plunge: Treasuries. Bonds and the stock market are loosely inversely correlated (sometimes stronger, sometimes weaker), but the inverse correlation lately has been very strong. After the rally got underway, money from treasuries moved into the market in a big way, and the last 5 days money has moving back into Treasuries in a big way. Bond holders (the smart money) are taking money off the table (stock market) and heading back into "safe" Treasuries.

I think today may not be descisive (volatile but approx flat), but I think next week will be a very down week for the stock market / up week for Treasuries.

Historically, (going back to early 1900's) there is a seasonality that has given only a 20% probability of the market rising during the summer months. In other words, only 2 years out of 10 has the market performed well during the months of Jun,Jul,Aug,Sep, & Oct.

Considering the economy, the leadership and the complete lack of any job growth, my prediction is that we have a less than 5% chance of the market rally continuing. Only a fool would bet otherwise. But miracles canand do happen. It's just not very likely given the economic conditions.

For the record, I am with you, I don't see what's holding the market up. Maybe more people believe in the coppex indictor? Personally, I had to look it up, lol.

Actually when I think about it, inflation fears are probably contributing to the market not correcting to a fundamentally sane level. Longer term I think there probably will be a period of high inflation, but I tend to think that is at least 2 years off and it being 5 years off would not surprise me.

I agree with dwot.. I think there is still an inflationary fear out there propping the market up.. Fundamentals be damned, if the man keeps throwing money at the problem eventually prices (not value, mind you) will go up.. It is a tug of war and I'm not certain who will win, "The Man" vs. Nature.. My inclination is nature will emerge victorious, it's just a matter of WHEN.

I had been thinking the same thing as dwot recently. I saw Peter Schiff speaking, and I think we all know how much be believes inflation is coming. He builds a pretty compelling case for it, as well. When I looked at the market through the lense of people preparing for inflation by snagging assets now it made a little more sense. It might also explain the increase in valuations across the board.

I don't know. It's a thought. I'm not 100% convinced that we're due for a plunge that retests the march lows, but I'm not a good market timer so I'm not trusting that judgement.

Lets not forget the more recent Don't short the market just yet post. It was quite timely and quite accurate. This is why I don't bother to join in the bear/bull argument. Like I said before, if you are investing long term it shouldn't matter much, but if you are investing short term thinking you will make massive profits at DOW 10000, I got news for you. If the DOW makes 10k (which I doubt) anytime this year, that to me is the ultimate sell indicator. Because if it makes it that high it will overcorrect to DOW 5000.

> I had been thinking the same thing as dwot recently. I saw Peter Schiff speaking, and I think we all know how much be believes inflation is coming. He builds a pretty compelling case for it, as well. When I looked at the market through the lense of people preparing for inflation by snagging assets now it made a little more sense. It might also explain the increase in valuations across the board.

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Except, one would think people will be buying commodities and commodity producers , not financials, retail and dunning, which will be a basket case in case of inflation,

Based on the fact that it is junk ( "high beta" is more polite way to put it) that ran up the most, I think it is just fast fingers at the investment firms hitting the computer programs that are driving the market these days. They are feeding on each other. After all, how else they are to pay back the TARP money. And the goal of a retail investor is not to get caught on the wrong side of that insanity.

Higher oil, the potential of a weaker $ and action in the metals indicate that there is a lot of current concern about the timing of the inflation.

We are seeing oil rise in spite of bad fundamentals. The markets anticipate shifts in the fundamentals. That means you have to anticipate the thinking of the big hedge funds and move with them or before them and since they have "superior market intelligence" (that you don't you have) you have to move before the fundamentals confirm that you are doing the right thing.

We have inflation in gasoline and that is enough to spur some current inflation hedging.

portefeuille and rofgile- The comparisons you are making is rediculous!!! goldminingXpert's pick of WNR was in August of 2008! How many stocks have DOUBLED from then until now?!?! They could probably be counted on two hands!!! If you look at stocks that have rallied off the lows since the crash happened, there are some 15+ baggers out there.Unfortunately, ALL of those stocks are still down 30-90% from where they were in August of last year! If you're going to present an argument against someone, make sure it's not full of hot air!!!

If I had one recommended improvement it would be to put better titles on your recent blogs. This isn't some technotrance bullsh*t. It's good material. I notice some people in the comments above seem to act as if you're a permabear gloom-and-doom ranter, and the only reason I can think of is that the title makes it sound like that. (if you are one of these people, then go and look at some of the GMX picks and you'll see he wasn't some goofball calling for DOW 4000 or whatever) There are some good green thumb picks in there.

I'm sorry,portefeuille, I misunderstood what you said. I had attributed the bank quote to you, not realizing that you were quoting someone else. I didn't bother to read the rest of it closely because I was assuming that it was just evidence to support your claim. Anyway, my apologies.

GMX, posted below on a different thread but stuck it here for you to see. My question is: how are these miners going to hold up in a bear market in your opinion since in they took such a tumble in the recent one? I rode them down and am still way under water on several. I am staying away from miners at this point in time. thanks-dave

bought around 20K dxd in RL for 51 today, haven't put on my CAPS yet, we go down more from here, haven't a guess how far short term but I am long term bear. GMX-took a 40% ride down on miners in 2008, are these miners going to hold up on the next ride down? I have not jumped in those but have CEF.

I've only been around for a while here but I've come to highly value your opinions. So how many points does the market have to correct here before we can all agree that you made another good call?

btw, where I live in Ozark, MO (pop. -10,000) 2 Chrysler related dealership closings announced today. I love my charts and company research but just driving by these 2 large local employers shuttered businesses is sobering. We were expecting a consolidation of the two dealerships and instead lost a lot of jobs.

My point is that a jobless recovery at circa 9% unemployment (U3) is just not happening here. The corporate layoffs have produced some Q1 profits that were higher than I expected and the Banks proits on operating expenses are further squeezing depositors. E.G. My wife has a CD with BAC and had to take out a checking account in order to get a special rate. Now BAC is charging a $20/month service charge on a $100 checking account. I haven't read the small print so I don't know if after the $100 is gone if they start deducting interest from her CD. They also raised the interest rate on her credit card with no late payment. Even ignoring the massive load of toxic assets that BAC is carrying I suggest that this is not a sustainable business model. 1 rec from me.

I'm going to put up a comments thread this weekend, so be on the lookout for that. Lots of good stuff here to get to and I'm just too tired to give everyone the response they deserve. Crystiz, I'm particularly touched by your story. I love the Ozarks--Branson's a great place--and I feel terrible for all the suffering that Wall St. and the federal government has brought to real America. P.S. I too bought DXD (50.38 here if my memory serves me right.)

GMX, nobody disputes (i don't htink) that the market is or at least was due for a noteworthy correction, but bears get a bit carried away with the profit game: predict something negative every 20 minutes, when something negative happens claim you are a prophet. Doesn't matter if you go one for 20.

I scored 1500 points in the 2 weeks after the market bottom and made 80 points on a C outperform and also did well with a FAS outperform and other such calls. I've made more points off of up moves than down moves in 2009.